Blackwood v The Queen

[2021] NZHC 33

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2014-004-002293

[2021] NZHC 33

BETWEEN

RICHARD TIMOTHY BLACKWOOD

AND

Applicant

THE CROWN

Respondent

Hearing:	On the papers
Appearances:	J Claymore for Mr Blackwood D Johnstone for the Crown
Judgment:	28 January 2021
Reissued:	23 February 2021

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Thursday, 28 January 2021 at 12:30 pm.

Registrar/Deputy Registrar

Solicitors:           Claymore Partners Limited (J Claymore), Auckland

Meredith Connell (Office of the Crown Solicitor), Auckland

BLACKWOOD v THE CROWN [2021] NZHC 33 [28 January 2021]

[1] Mr Blackwood was charged with 28 separate charges by the Financial Markets Authority (the FMA). He was convicted as a party to four charges of theft by a person in a special relationship after a second trial in the High Court.1 He appealed to the Court of Appeal, which allowed his appeal.2 Mr Blackwood now applies for indemnity costs under the Costs in Criminal Cases Act 1967 in relation to his High Court costs. He says that the charges ought never to have been brought against him, there being no evidence to prove that he knew about the wrongdoing.

Procedural history

[2]                 The FMA alleged that Mr Bublitz knowingly misappropriated funds raised from the public by Mutual Finance Ltd (Mutual), a company he controlled, in breach of related party restrictions in a deed of guarantee between Mutual and the Crown. Messrs McKay and Blackwood were charged as parties to this offending.

[3]                 Messrs Bublitz, McKay, Morrison3 and Blackwood were charged on 11 March 2014. The first trial commenced before me on 8 August 2016 and was set down for 12 weeks. In November 2016 the defendants, apart from Mr Blackwood, applied for a stay of proceedings on the grounds of abuse of process, largely because of the length of the trial. I dismissed that application on 23 November 2016.4 I noted, however, that at the time of issuing that decision we had just completed week 16 of the trial. The Crown estimated that it would not finish until late February 2017. I considered that it was possible the trial would not be completed until May or June 2017. I observed that I had already dismissed 12 charges in the 7th week of trial, and another 22 charges in the 10th. I considered that the Crown had not appropriately pared back the case to its essentials. Crown counsel provided advice that in the event the trial was not severed and proceeded subject to a direction by the Court that the Crown reduce the number of charges, the Crown would elect to proceed on a specified number of charges. Nineteen charges and 32 verdicts were identified by the Crown as representing the gravamen of the allegations against the defendants. For reasons of case management, I therefore dismissed the other charges.

1      R v Bublitz [2019] NZHC 222.

2      Bublitz v R [2019] NZCA 364, [2019] 3 NZLR 533.

3      The charges against Mr Lance Morrison were subsequently dismissed.

4      R v Bublitz [2016] NZHC 2863.

[4]                 On 10 May 2017, I aborted the trial on the basis that the extensive late disclosure by the Crown prejudiced the defendants. These errors were inadvertent and not in bad faith.5 On 13 August 2018 a second trial commenced before Toogood J. It concluded on 5 September 2018, and Mr Blackwood was found guilty on four charges.6  He then appealed to the Court of Appeal, and was successful.7  The Court of Appeal considered that it could not exclude the possibility that he did not know at the relevant times that the transactions were in breach of the related party restrictions in the Crown guarantee.

[5]                 Mr Blackwood sought costs in the Court of Appeal. The Court of Appeal declined to award costs.8 The Court observed that Mr Blackwood had not been found innocent, but instead the Court merely considered that it could not exclude the possibility that he was not aware of the wrongdoing. The Court emphasised that the fact that it came to a different conclusion to that reached by Toogood J did not suggest prosecutorial overreach or misconduct. Rather, it suggested the opposite: that the proper inference to draw from proven facts was one on which reasonable minds might differ, particularly applying the very high standard of proof required.

[6]Mr Blackwood now seeks costs for the High Court trials.

Mr Blackwood’s claim

[7]                 Mr Blackwood was represented by counsel appointed by Legal Aid as from 28 June 2016, that is, six weeks prior to commencement of the first trial. The costs he accrued before this point come to $284,493.03. He seeks full indemnity costs.

The law

[8]Section 5 of the Costs in Criminal Cases Act 1967 reads:

5        Costs of successful defendant

(1)Where any defendant is acquitted of an offence or where the charge is dismissed or withdrawn, whether upon the merits or otherwise, the

5      R v Bublitz [2017] NZHC 2251.

6      R v Bublitz, above n 1.

7      Bublitz v R, above n 2.

8      Blackwood v R [2020] NZCA 504.

court may, subject to any regulations made under this Act, order that he be paid such sum as it thinks just and reasonable towards the costs of his defence.

(2)Without limiting or affecting the court’s discretion under subsection (1), it is hereby declared that the court, in deciding whether to grant costs and the amount of any costs granted, shall have regard to all relevant circumstances and in particular (where appropriate) to—

(a)whether the prosecution acted in good faith in bringing and continuing the proceedings:

(b)whether at the commencement of the proceedings the prosecution had sufficient evidence to support the conviction of the defendant in the absence of contrary evidence:

(c)whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty:

(d)whether generally the investigation into the offence was conducted in a reasonable and proper manner:

(e)whether the evidence as a whole would support a finding of guilt but the charge was dismissed on a technical point:

(f)whether the charge was dismissed because the defendant established (either by the evidence of witnesses called by him or by the cross-examination of witnesses for the prosecution or otherwise) that he was not guilty:

(g)whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the investigation and proceedings was such that a sum should be paid towards the costs of his defence.

(3)There shall be no presumption for or against the granting of costs in any case.

(4)No defendant shall be granted costs under this section by reason only of the fact that he has been acquitted or that any charge has been dismissed or withdrawn.

(5)No defendant shall be refused costs under this section by reason only of the fact that the proceedings were properly brought and continued.

[9] Section 5(1) operates as a threshold question and is plainly satisfied in this case. Mr Blackwood has been acquitted or had the charges against him withdrawn. The Court then shall have regard to all relevant circumstances, and in particular the items under s 5(2). Section 5(3) provides that there is no presumption either way, but s 5(4) provides that the grant of costs is not automatic by reason only that s 5(1) is satisfied. Section 5(5) provides that it is not impossible to grant costs even if the

proceedings were properly brought and continued. Hardie Boys J suggested that the s 5 criteria ultimately come down to whether (1) the prosecution was reasonably brought and pursued, and (2) whether the accused brought the charge on his own head.9 If the answer to both questions is “no”, then costs should generally be awarded. Fogarty J, however, has more recently observed that the plain words of s 5(2) still apply, and the criteria therein provide a logical structure for the court’s analysis.10

[10]              Costs in criminal cases are very rarely awarded. There is a public interest in not deterring prosecuting agencies from bringing prosecutions, and even in a prosecutorial system operating well some prosecutions will fail.11 Costs are therefore not given, in general, unless the prosecution has acted improperly or unreasonably in the investigation or prosecution of the charge. This means that the behaviour of the parties is often relevant. Where a defendant has made reasonable efforts to dissuade the prosecution, they are more likely to receive costs. Where the Crown has acted irrationally and brought a prosecution when the evidence plainly did not support a conviction, costs are more likely to be awarded against it.12

[11] Section 13 of the Costs in Criminal Cases Act 1967 provides for the making of regulations prescribing a scale of costs to be awarded under the Act. The regulations were promulgated in 1987 and provide for a maximum fee on a conviction appeal of

$226 for each half day or part half day in Court. These rates have not been updated in the last 33 years and are clearly no longer fit for purpose.13 Section 13(3) gives the power to exceed scale costs, but the existence of the scale suggests that indemnity costs are not the default.14 Indemnity costs are appropriate where the defendant had no case to answer, and had not acted in such a way as to make prosecution likely. They are appropriate where “the innocent person [is] prosecuted in bad faith or as a result

9      R v Margaritis HC Christchurch T66/88, 14 July 1989 at 8.

10     R v Connolly (2006) 22 NZTC 19,844 (HC).  Fogarty J’s judgment was overturned by the Court  of Appeal but revived by the Supreme Court in R v Reid [2007] NZSC 90, [2008] 1 NZLR 575, which, at [21], affirmed that the statutory criteria are to be applied.

11 Blackwood v R, above n 8, at [9]; see also W (CA447/2017) v R [2020] NZCA 283 at [15]. The proposition has been good law for a very long time: D v R [1995] 3 NZLR 366 (HC), citing Berry v British Transport Commission [1962] 1 QB 306 (CA).

12 Ministry of Fisheries v Maruha Corporation Ltd HC Christchurch CRI 2006-409-20, 9 June 2006.

13 Blackwood v R, above n 8, at [11]; The Registrar of Companies v Feeney HC Auckland CRI-2011- 404-14, 21 June 2011; and Costs in Criminal Cases Regulations 1987, sch 1 pt 1 sub-pt C(1).

14 R v Margaritis, above n 9.

of inexcusable negligence on the part of the prosecution”.15 The Crown’s decision to increase the complexity of a case, which in turn requires the defendant to match the expenditure, may also justify an increase from scale.16

Are costs appropriate?

[12] I consider the points raised by s 5(2)(b) and (f) to be of especial relevance here. I dismissed Mr Blackwood’s application under s 147 of the Criminal Procedure Act 2011 to discharge him on the charges.17 The Court of Appeal has assessed the state of the evidence in its judgment on the costs for Mr Blackwood’s appeal.18 It considered that whether the inference that Mr Blackwood was aware of the wrongdoing could be drawn was an issue on which reasonable minds might differ. The Court of Appeal considered that there was a proper basis for the charges that were brought against Mr Blackwood.19 Section 5(2)(b) therefore weighs against Mr Blackwood’s application.

[13] Likewise, Mr Blackwood did not prove his innocence. The Court of Appeal emphasised that it could not exclude the reasonable possibility that he did not know of the wrongdoing at the relevant times.20 It explicitly did not find him innocent.21 Section 5(2)(f) likewise weighs against Mr Blackwood’s application.

The conduct of the trial

[14] As I commented when dealing with Mr Bublitz’s application for costs, the conduct of the trial does not neatly fall under any of the s 5 criteria, but is nonetheless part of the relevant background. I have dealt with this issue at some length in other judgments and hence address it only briefly here.22

15 Reriti v Police DC Christchurch CRN 3009023671, 18 April 1994 per Judge Erber. See also Y v R HC Auckland T281/96, 21 July 1997 at 8 per Salmon J, where the Judge considered that total indemnity ought to be given only when the Court considered that the prosecution should never have been brought; and R v Mather HC Christchurch T33/97, 26 July 1997 per Chisholm J, where the Court observed that full indemnity was reserved for bad faith or gross misconduct, and ought to be exceptional.

16     Commerce Commission v District Court HC Auckland M 244/98, 10 July 1998 per Smellie J.

17     R v Bublitz [2017] NZHC 394.

18     Blackwood v R, above n 8, at [23].

19 At [24].

20 At [23].

21 At [23].

22     R v Bublitz [2018] NZHC 373 at [56].

[15]              The conduct of the trial by the Crown was at times problematic. The Crown brought a large number of charges and very prolix pleadings. This meant that the first trial ran well over time, and I had to dismiss a substantial proportion of the charges for case management reasons. The Crown’s failings caused the extension of the first trial, and then caused it to be aborted. The aborted trial ran for nine months, in large part due to the Crown’s excessively numerous charges and very lengthy particulars. I consider that this is a serious failing. Mr Blackwood was required to sit in Court for nine months away from family and employment. He also expended what money he had to defend the charges in a trial ultimately aborted through Crown error.

[16]              On balance, therefore, I consider an award of costs to be appropriate in this case.

Are full indemnity costs appropriate?

[17] As discussed at [11] above, indemnity costs are only awarded where the Crown did not act in good faith or acted with inexcusable negligence. As the Court of Appeal found, neither of those was the case here.23 The prosecution was appropriate even if the manner of charging and the conduct of the trial was not. I therefore do not consider full indemnity costs to be appropriate.

The appropriate quantum of costs

[18]              As I outlined above at [11], the scale costs are outdated and not fit for purpose. The question of quantum then becomes one of discretion and judgment. Section 5(1) gives the court the power to order a payment of such sum as it “thinks just and reasonable” towards the costs of the defence. I note in particular, the case was one of special difficulty, complexity and importance from the outset. The legal costs that Mr Blackwood incurred at the early stage of the proceedings would have included advice relating to the Crown charge notice, the allegations of conspiracy and the expert evidence as to the related party nature of the transactions at issue. All these issues were the subject of errors by the Crown that significantly added to Mr Blackwood’s burden.

23     Blackwood v R, above n 8, at [24].

[19]              I   consider   the   situation   to   be   closely   analogous   to   that   facing    Mr Lance Morrison  when  I   granted  his   costs   application  in   2018.24   While  Mr Blackwood has been through a further trial and was in the end acquitted, I do not consider that the second trial was flawed in the same way as the first. The general position that costs are not awarded in criminal cases therefore applies.

[20]I awarded Mr Morrison $75,000 as a contribution to his total costs of

$248,295.79. As a matter of parity, I consider that costs of $90,000 in Mr Blackwood’s favour is just and reasonable. I consider this amount gives due weight to the relevant factors discussed at [12]–[13].

Result

[21] I therefore award costs in the sum of $90,000 to Mr Blackwood payable under s 5 of the Costs in Criminal Cases Act 1967.

Woolford J

24     As discussed in R v Bublitz, above n 22, at [63].